Private companies expecting strong 2012


We’ve been seeing a definite trend in the economic prognostication front toward the positive – nothing earth-shattering, but almost universally moving in the right direction. Now comes just about the strongest report we’ve seen yet, from PwC. It says that 78% of private companies it has surveyed are expecting positive growth over the next 12 months, and 35% say the growth will be measured in double digits.

The results come from the PwC US Private Company Trendsetter Barometer.

The growth projections are impressive – and the employment numbers are also very encouraging. More companies are planning on adding staff than not – 54% are going to look at increasing their payroll. Equally good news is the flip side – only 3% are expecting to cut staff. That means that 97% will end 2012 with as many or more employees as they had at the end of 2011.

Interestingly, the confidence expressed in revenue and hiring projections does not translate directly in to confidence simply stated. Only 39% are optimistic about the prospects for the overall economy – however, PwC says that is a 12% gain over the result from Q3 2011. But the outright pessimism figure is only 16%, down from 24% and resulting in a total of 76% that are neutral to optimistic about the economic situation.

“After considerable economic misgivings in the third quarter of 2011, Trendsetter executives are increasingly optimistic,” says Ken Esch, a partner with PwC’s Private Company Services practice. “But even in the late summer and early fall, when anxiety ran high about Congressional gridlock and the potential effect of the S&P downgrade of US debt, private companies didn’t abandon their growth agenda. Instead, they maintained strong revenue forecasts and spending plans. Clearly, though, they’re still concerned about the Eurozone’s sovereign debt crisis — not just about its impact on European growth, but also the impact on the growth of emerging markets, which still rely a good deal on foreign direct investment and strong export revenue. And so we continue to see Trendsetter executives give a lukewarm assessment of the world economy.”

RBR-TVBR observation: Strong growth and robust hiring plans are the elements that can fuel a spike in consumer confidence and get the ball rolling on a virtuous circle where success breeds success and so on. The economy has improved from freefall to stagnation – maybe now we’re hitting the part where we start to make up lost ground.